Net Radio Deadline Looms (Again)
Stations such as SomaFM in San Francisco, which averages approximately 500,000 listeners, would see its annual rates jump from around $10,000 to around $600,000, according to a recent article. That doesn’t sit well with owner Rusty Hodges, who says the company made about $125,000 last year and has no way to pay the new rates. But he promises to keep broadcasting his eclectic recordings—many of which don’t receive mainstream airplay—until he’s sent a bill.
"I'll keep broadcasting till they send me a collection notice," says Hodges. "And then, I guess SomaFM will go bankrupt."
The webcasters are also attempting legislative approaches to the issue. A coalition of webcasters called SaveNetRadio has succeeded in getting a bill introduced in the House of Representatives—Rep. Jay Inslee (D-Wash.) introduced the Internet Radio Equality Act, HR 2060, on April 26—and a similar bill has been introduced into the Senate. Each would nullify the CRB’s decision and introduce rates of 7.5 percent of gross revenue, which match those levied on Sirius and XM. As of the end of June, more than 85,000 phone calls, 400,000 faxes, and many more emails have been sent to representatives and senators.
Hearings before a Small Business Subcommittee, though, have not fared as well, with the committee chair noting that time is a factor in having Congress resolve the issue.
"July 15 is just around the corner, and I hope the two parties can come together and resolve this issue," said House Small Business Committee Chair Nydia Velazquez. "I really don't think Congress would be the best type of vehicle to resolve this type of issue."
So the battle has also moved on to the legal front, with an appeal filed to reverse the CRB’s decision. If the case is taken by an appeals court judge before July 15, it is possible royalty increases could be suspended yet again. The appeal is being led by David Oxenford of law firm Davis Wright Tremaine LLC, which represented a group of independent internet radio stations before Congress and in private negotiations leading to the Small Webcasters Settlement Act of 2002, which established the royalty rate that is now being challenged by the CRB’s decision.
The big players, from Clear Channel and NPR, both of whom simulcast content to the web, are also fully engaged in the fight, as are the large players in the webcasting space, such as Yahoo Broadcasting.
"We might now be at the beginning of real negotiations with SoundExchange," says Ian Rogers, general manager of web radio leader Yahoo! Music, who made these comments with less than two weeks to go to the deadline.
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